Blood-testing startup Theranos said to be closing

Blood-testing startup Theranos said to be closing

David Taylor, who became CEO in June, sent an email to shareholders to announce the decision and inform them the company will seek to pay unsecured creditors its remaining cash over future months, according to the Wall Street Journal.

Theranos, the blood-testing company founded by Elizabeth Holmes, is going out of business. Company founder Elizabeth Holmes and former COO and president Ramesh "Sunny" Balwani were indicted in June on federal charges of defrauding investors out of hundreds of millions of dollars, along with physicians and patients. She graced magazine covers, and Inc. magazine dubbed her "The Next Steve Jobs".

Soon after she devoted herself full time to her company, Holmes attracted a number of key investors (including Larry Ellison and Draper Fisher Jurvetson) and high-profile board members (including former U.S. Secretaries of State Henry Kissinger and George Schultz, and former U.S. Senators William Frist and Sam Nunn).

But Theranos came under scrutiny after the Journal published articles questioning its claims.

Cue a slew of lawsuits, commercial challenges and investigations from investors and medical regulators alike, with titans like the US Securities and Exchange Commission (SEC) and Centers for Medicare and Medicaid Services (CMS) wading in on the action against Theranos. However, it was reported that Theranos conducted on traditional blood-testing machines rather than its own Edison machines because the latter gave inaccurate results. At one time, Theranos was worth more than US$10 billion.

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Under founder and now-former CEO Elizabeth Holmes, Theranos raised more than $700 million from investors and was valued at $9 billion at its peak.

There are many outstanding questions surrounding Theranos, not least the outcome of Ms Holmes and Mr Balwani's forthcoming fraud trial, as well as whether the remaining patents being acquired by Fortress will turn out to have any lasting value. After years of scandal and failed attempts to sell the company, its cash dipped too low, according to a $65 million loan agreement with Fortress Investment Group, which is entitled to foreclose on the company's assets.

Theranos did not immediately respond to Reuters' request for comment.

Holmes and the company settled the SEC's allegations. "Despite our careful cash management, we are in default under the Fortress credit facility", Taylor wrote.

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